Solar Energy Business Developments - Kyocera · 10 12 14 CY 2005 CY 2020 CY 2030 Photovoltaics Around 1.42 GW for PV Mkl Output conversion CF: 4kW/kl Residential 320k homes Public

Solar Energy Business Developments

September 18, 2008

Tatsumi MaedaDirector & Senior Managing Executive OfficerGeneral Manager of Corporate Solar Energy GroupKYOCERA CORPORATION

Certain of the statements made in this document are forward-looking statements (within the meaning of Section 21E of the U.S. Securities and Exchange Act of 1934), which are based on our current assumptions and beliefs in light of the information currently available to us. These forward-looking statements involve known and unknown risks, uncertaintiesand other factors. Such risks, uncertainties and other factors include, but are not limited to: general economic conditions in our markets, which are primarily Japan, North America, Europe and Asia, particularly China; unexpected changes in economic, political and legal conditions in China; our ability to develop, launch and produce innovative products, including meeting quality and delivery standards, and our ability to otherwise meet the advancing technological requirements of our customers, particularly in the highly competitive markets for ceramics, semiconductor parts and electronic components; manufacturing delays or defects resulting from outsourcing or internal manufacturing processes which may adversely affect our production yields and operating results; factors that may affect our exports, including a strong yen, political and economic instability, difficulties in collection of accounts receivable, decrease in cost competitiveness of our products, increases in shipping and handling costs, difficulty in staffing and managinginternational operations and inadequate protection of our intellectual property; changes in exchange rates, particularly between the yen and the U.S. dollar and euro, respectively, in which we make significant sales; inability to secure skilled employees, particularly engineering and technical personnel; insufficient protection of our trade secrets and patents; our continuing to hold licenses to manufacture and sell certain of our products; the possibility that future initiatives and in-process research and development may not produce the desired results; the possibility that companies or assets acquired by us may require more cost than expected for integration, and may not produce the returns or benefits, or bring in business opportunities, which we expect; events that may impact negatively on our markets or supply chain, including terrorist acts and outbreaks of disease; the occurrence of natural disasters, such as earthquakes, in locations where our manufacturing and other key business facilities are located; the possibility of future tightening of environmental laws and regulations in Japan and other countries which may increase our environmental liability and compliance obligations; fluctuations in the value of, and impairment losses on, securities and other assets held by us; and changes in accounting principles. Such risks, uncertainties and other factors may cause our actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements included in this document.

Forward-Looking Statements

1

PV Global Market TrendPV PV GlobalGlobal Market TrendMarket Trend

2

Europe

USA

Spreading Feed-in Tariffs ⇒ 22 countries

Growing Incentives⇒ 38 states

Feed-in Tariff

Net Metering Feed-in Tariff

+ Net Metering

Incentives

RPS

Incentives + RPS

3

Contribution of Subsidies to Expansion of European and U.S. Markets

Please refer to accompanying note on page 1. RPS: Renewables Portfolio Standard

0.35

6.69

1.4

3.5

13

0

2

4

6

8

10

12

14

CY 2005 CY 2020 CY 2030

Photovoltaics

Around 1.42GWfor PV

Ｍｋｌ

Output conversionCF: 4kW/kl

Residential320k homes

Public & Industrial

300MW

Toward the Realization of Low-Carbon Society of Japan

Around 14.3GWfor PV

Residential3,200k homes

Public & Industrial

3,000MWAround 53.1GW

for PV

to VS. 2005:

10×

40×

4Please refer to accompanying note on page 1.

Current Best scenarioOngoing effort

Equivalent to 70% of new houses

Forecast

Long term perspective for growth in use of photovoltaic energy / Estimate by Kyocera Corp.

1.4

0.40.25

1.8GW

1.0

0.35

FY08 FY09 FY11 FY13

2.02.4

3.2GW

1.3

2.3

3.6

FY08 FY09 FY11 FY13

3.6×

FY3/08 09(E) 11(E) 13(E)

0.2 0.2

0.4GW

0.20.3

0.5

FY08 FY09 FY11 FY13FY3/08 09(E) 11(E) 13(E)

JapanJapanEUEUUSAUSA

FY3/08 09(E) 11(E) 13(E)

10.4×

Right: ConservativeLeft: Policy driven 0.1

0.4

0.7GW

0.03

0.15

0.5

FY08 FY09 FY11 FY13

KoreaKorea30×

IndiaIndia

0.03

0.13

0.05

FY08 FY09 FY11 FY13

8.3×

4.5×4.7GW

0.25GW

0.9GW

0.9GW

2.6GW

WorldMarket

Size

WorldMarket

Size

5.8

8.7

3.75.2

2.93.62.1

10.9GW

FY3/08 FY09 FY11 FY13FY10 FY12

7.0GW

4.7GW

7.2GW3.3×

5.2×

3.4×

2.2×

Estimate by Kyocera Corp.

Principal Market Outlook

5Please refer to accompanying note on page 1.

Forecast

FY3/08 09(E) 11(E) 13(E) FY3/08 09(E) 11(E) 13(E)

0

50

100

150

200

FY05 06 07 08 09 10 11 12 13 14 15 16 17 18

原料不足

Kton

GRAY

YELLOW

MaterialShortage

New material manufacturers

Existing material manufactures

Requirement for Solar Products

Requirement forSemiconductors

Required Amount of Material forSemiconductors + Solar Products

Forecast

Comparison between Expansion Plans of Material Manufacturers and Market Requirements

6Please refer to accompanying note on page 1.

FY3/05Estimate by Kyocera Corp.

0

5

10

15

20

25

FY07 08 09 10 11 12 13 14 15 16 17

GW

Large Power Plants

Public &Industrial

Stand Alone

Residential

Demand Forecast in Four Principal Markets

7

Forecast

Please refer to accompanying note on page 1.

Estimate by Kyocera Corp.

FY3/07

Overseas Solar Photovoltaic (PV) System Manufacturers

8Please refer to accompanying note on page 1.

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SolarWorld

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Q-Cells★★

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SCHOTT★★

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Wurth

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Solon★

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Europe, US, Korea, etc.⇒ Continuous market growth

Expansion of subsidy policies

Increase in production volume by existing manufacturers + new entrants

⇒ Stabilization of supply and price

Increase in production of material

＋

Rapid increase in number of manufacturers ＞ 300 Companies

＝

Beginning of "intense competition era"Gain comprehensive competitive advantages:

"cost competitiveness, technologies for development and quality"

Beginning of "intense competition era"Gain comprehensive competitive advantages:

"cost competitiveness, technologies for development and quality"

EEG* in Germany: reexamination of buyback price of feed-in tariffannual decrease rate 5% ⇒ 8～10%

9

*EEG= Erneuerbare-Energien-Gesetz

Market Conditions: Overview

Please refer to accompanying note on page 1.

About KYOCERA SolarAbout About KYOCERAKYOCERA SolarSolar

10

8.7

7.0

3.6

5.2

10.9GW

1.1 1.5 1.62.2

10.0%6.9%5.4%5.1%

28.0%

0

2

4

6

8

10

12

FY3/05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY130%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

GW

Multi cMulti c--Si or ThinSi or Thin--film ? Total cost, longfilm ? Total cost, long--tern reliabilitytern reliability・・・・・・

Thin Film Production Share

Technology Market Trend GW

SOURCE： PV News, Lux Research

16

14

12

10

8

T/F SiMulti c-Si (kyocera) CIGS CdTeCurrent Module Efficiency (%)

A company

8.5% B company

8.3%

C company

8.6%

F company

10.9% D company

9.6%

E company

8.1%

G company

11.0%

H company

10.4%

14.1% Kyocera

11

Forecast

Please refer to accompanying note on page 1.

Market Expansion

0%

20%

40%

60%

80%

100%

12

14% 8%

construction costUp significantlyMounting racks

approx. 1.7 times

No. of cellsapprox. 1.7 times

Inverter

Constructioncost

Rack, etc.Inverter

Solar cells

Residential

Multi c-Si or Thin Film 勝者は？ トータルコスト、長期信頼性・・・

Influence of conversion efficiency on Solar System Costs

SOURCE： PV News, Lux ResearchPlease refer to accompanying note on page 1.

Multi cMulti c--Si or ThinSi or Thin--film ? Total cost, longfilm ? Total cost, long--tern reliabilitytern reliability・・・・・・

○ ○ ○ ○

Improvement of conversion efficiencies

Casting Cutting Wafer slicing Solar cells Solarmodules

Silicon

Vertical integrationVertical integration ⇒⇒ Aims to maximize conversion efficiencies with Aims to maximize conversion efficiencies with optimization in all prooptimization in all production phasesduction phases

Improvement of conversion

efficiencies

Improvement ofcrystalline quality

Impurity contamination measures

Optimization of slicing conditions

Thinner wafers

Improvement in quality of slicedmaterial

Passivation

Reactive Ion Etching (RIE) technology

High sheet resistance emitters

Improvementof contact metal

Optimization ofmaterial

Optimization offabrication process

Cost competitiveness: Improvement of conversion efficiencies

13Please refer to accompanying note on page 1.

BackContact

CellCurrent:３BB

FY09FY3/05

2BB 3BB Back Contact

Target 18.5%3.86W/cell

17.5%16.5%16.5%15.7%4.50W/cell3.67W/cell 4.06W/cell 4.26W/cell

Lager Cell (156mm square)

Higher efficiencies for Back Contact

Approx. 17% improvement from current power output２BB

Conversion efficiencies

Power output

Technologies

Productivity 1. Higher cell efficiencies

2. Thinner cells08

180μｍ240 / 200μｍ Further advancement of thinner cells

100% achievement

FY3/05 06 07

Productivity improvement of approx. 40% compared to FY3/05

09・・・

FY10

Cost competitiveness: Productivity

14Please refer to accompanying note on page 1.

Development of Differential Products

Annual average temperature map

Snow resistance Snow resistance

High temperature resistance

High temperatureresistance

Design orientedDesign oriented

Building unifiable

Compact stand-alone power source

Snow resistance / weighting durabilityHigh temperature resistance / heat durabilityDesign oriented / black back sheetsBuilding unifiable / frame-lessCompact stand-alone power source / small size

BlackBack sheets

Compact stand-alonepower source

Frame-less

High temperature resistance

Please refer to accompanying note on page 2. 15

Compact stand-alone power source

Compact stand-alone power source

Snow load analysis

PV Modules for 5400PaObjective: Snow resistance (5400Pa)Challenges: Frame strength

Module durability

Test exampleusing real products

Black ModulesObjective: Better appearanceChallenges: High temperature resistance

TEMP. Analysis

Objective: Compatibility for various installation methods

Challenges: Metal fitting reliability

Without frame

Frameless ModulesFall away

Direction of short frameDirection of short frame

Direction of long frame

Please refer to accompanying note on page 1. 16

Direction of long frame

Module

Cell

FY10FY09

156mm×156mm

Larger Cell

180μm

200W

Back Contact

220W

Black Module

FY3/05 ・・・・・

17.5%16.5%16.5%15.7%

Development of Solar Modules

210WHigh power

output175W

Snow resistance (5400Pa)

17

Frame less

2BB 3BB

Please refer to accompanying note on page 1.

Target

Quality is True “DIFFERENTIATION”

KYOCERA with THE QUALITY

Installation

EvaluationItems

Output

Durability

Reliability

No.1 Quality Evaluation in GermanyNo.1 Quality Evaluation in Germany**in 15 Makers

(Best: 1.0, Worst: 6.0)

18Please refer to accompanying note on page 1.

Factor with biggest impact on costs, ⇒ Conversion efficiency

Kyocera’s multi-crystalline cells: Over 20 years of testing and evaluation

Major Characteristics Required of Solar Cells

1. Costs

VS thin-film 8~11%Kyocera’s back contact cells: 18.5%

2. Long-term reliability

VS thin-film ??

Multi-crystalline solar cells or thin-film solar cells ?19

・ Reduce total system cost, including installation cost・ Stable long term output (high reliability)

Please refer to accompanying note on page 1.

0

100

200

300

400

500

600

700

3/92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

EEG in Germany

Amendment to EEG in Germany

California SolarInitiatives

Residential subsidies in Japan

(until FY06)

Back Contact CellBackBack ContactContact CellCellHigh Efficiency

18.5%High Efficiency

18.5%

FY

Please refer to accompanying note on page 1. 20Forecast

Kyocera's Production Expansion Plan of PV Systems

550MW

400MW

300MW

500MW

650MW

Czech RepublicMexicoTianjin

Germany

Brazil Australia

Singapore

Beijing

JapanKyocera

USA S-Korea

Germany Singapore China

MexicoYohkaichiJapan / IseChinaCzech Republic

USASouth Korea AustraliaJapan

Brazil

21

8 sales bases worldwide

4 production bases worldwide“Production where markets are”

"Quick delivery”“Market-oriented module design”

“Sales network built on long-term relationships of trust”

“Anticipating customer needs”

Please refer to accompanying note on page 1.

Ise 150MW/yr Plant construction completed

Mexico 240MW/yr Plant constructioncompleted